Eagle Eye Warning: Aero-Engine Power's accounts receivable growth rate exceeds revenue growth rate

Sina Finance Listed Company Research Institute | Earnings Hawk-Eye Early Warning

On April 1, AECC Aero-Engine released its 2025 annual report, with the audit opinion being a standard unmodified audit opinion.

The report shows that the company’s operating revenue for the full year of 2025 was RMB 46.33B, down 3.23% year over year; net profit attributable to shareholders was RMB 634M, down 26.27% year over year; net profit attributable to shareholders after deducting non-recurring items was RMB 294M, down 62.81% year over year; and basic earnings per share was RMB 0.24 per share.

Since it was listed in April 1996, the company has delivered cash dividends 21 times, with cumulative cash dividends implemented totaling RMB 46.33B.

The listed company earnings hawk-eye early warning system conducts intelligent quantitative analysis of AECC Aero-Engine’s 2025 annual report across four major dimensions: performance quality, profitability, funding pressure and safety, as well as operational efficiency.

I. Performance Quality

During the reporting period, the company’s revenue was RMB 738M, down 3.23% year over year; net profit was RMB 4.42B, down 24.98% year over year; and net cash flow from operating activities was -RMB 43.73B, up 69.13% year over year.

From the overall performance perspective, it is necessary to focus on:

• Operating revenue growth continues to decline. In the last three annual reports, the year-over-year changes in operating revenue were 17.89%, 9.48%, and -3.23%, respectively, with the downward trend continuing.

• The growth rate of net profit attributable to shareholders after deducting non-recurring items continues to decline. In the last three annual reports, the year-over-year changes in non-recurring-item-adjusted net profit attributable to shareholders were 45.85%, -35.2%, and -62.81%, respectively, with the downward trend continuing.

From the matching of revenue, costs, and period expenses, it is necessary to focus on:

• Operating revenue and taxes and surcharges move in opposite directions. During the reporting period, operating revenue changed -3.23% year over year, while taxes and surcharges changed 32.28% year over year; operating revenue and taxes and surcharges moved in opposite directions.

Combining the quality of operating assets, it is necessary to focus on:

• The growth rate of accounts receivable is higher than the growth rate of operating revenue. During the reporting period, accounts receivable increased 24.44% from the beginning of the period; operating revenue decreased 3.23% year over year; and the growth rate of accounts receivable was higher than that of operating revenue.

• The ratio of accounts receivable to operating revenue continues to increase. In the last three annual reports, the ratio of accounts receivable to operating revenue was 47.88%, 74.6%, and 95.93%, respectively, showing continuous growth.

Combining the quality of cash flow, it is necessary to focus on:

• Operating revenue and net cash flow from operating activities move in opposite directions. During the reporting period, operating revenue decreased 3.23% year over year; net cash flow from operating activities increased 69.13% year over year; operating revenue and net cash flow from operating activities moved in opposite directions.

• Net cash flow from operating activities has remained negative. During the reporting period, net cash flow from operating activities was -RMB 4.42 billion, and it has been negative for three consecutive years.

| Item | 20231231 | 20241231 | 20251231 | | Net cash flow from operating activities (RMB) | -RMB 738M | -RMB 4.42B | -RMB 4.42B |

• Net profit and net cash flow from operating activities are misaligned. During the reporting period, net profit was RMB 0.74 billion and net cash flow from operating activities was -RMB 4.2 billion; net profit and net cash flow from operating activities are misaligned.

| Item | 20231231 | 20241231 | 20251231 | | Net cash flow from operating activities (RMB) | -RMB 6.74B | -RMB 14.309 billion | -RMB 14.31B | | Net profit (RMB) | RMB 4.42B | RMB 0.983 billion | RMB 983M |

• The ratio of net cash flow from operating activities to net profit is below 1. During the reporting period, the ratio of net cash flow from operating activities to net profit was -5.988, which is below 1, indicating weak earnings quality.

| Item | 20231231 | 20241231 | 20251231 | | Net cash flow from operating activities (RMB) | -RMB 4.42B | -RMB 14.31B | -RMB 14.31B | | Net profit (RMB) | RMB 1.52B | RMB 1.52B | RMB 738M | | Net cash flow from operating activities / net profit | -4.44 | -14.55 | -5.99 |

II. Profitability

During the reporting period, the company’s gross margin was 9.12%, down 9.36% year over year; net profit margin was 1.59%, down 22.47% year over year; and return on net assets (weighted) was 1.58%, down 27.19% year over year.

From the company’s operating end, focusing on returns requires attention to:

• Selling gross margin continues to decline. In the last three annual reports, selling gross margin was 11.08%, 10.06%, and 9.12%, respectively, with a continuously downward trend.

• Selling net profit margin continues to decline. In the last three annual reports, selling net profit margin was 3.47%, 2.05%, and 1.59%, respectively, with a continuously downward trend.

From the company’s asset side, focusing on returns requires attention to:

• Over the most recent three years, the average return on net assets is below 7%. During the reporting period, the weighted average return on net assets was 1.58%, and the average weighted average return on net assets over the most recent three fiscal years was below 7%.

• Return on net assets continues to decline. In the last three annual reports, the weighted average return on net assets was 3.66%, 2.17%, and 1.58%, respectively, with a continuously downward trend.

From non-recurring gains and losses, it is necessary to focus on:

• Non-recurring gains have a relatively high proportion. During the reporting period, the ratio of non-recurring gains to net profit was 51.3%. (Note: Non-recurring gains = net investment gains + net gains/losses from fair value changes + non-operating income + losses from disposal of non-current assets).

III. Funding Pressure and Safety

During the reporting period, the company’s asset-liability ratio was 59.97%, down 1.27% year over year; the current ratio was 1.16, and the quick ratio was 0.74; total debt was RMB 44.66B, including short-term debt of RMB 43.98B, and short-term debt accounted for 98.48% of total debt.

From the perspective of short-term funding pressure, it is necessary to focus on:

• The ratio of short-term to long-term debt increases significantly. During the reporting period, short-term debt / long-term debt rose significantly to 35.32.

• Short-term debt is relatively large, with a cash reserve shortfall. During the reporting period, broad money funds were RMB 11.31 billion, short-term debt was RMB 26.79 billion, broad money funds / short-term debt was 0.42, and broad money funds were lower than short-term debt.

• Short-term debt pressure is high, and the capital chain faces strain. During the reporting period, broad money funds were RMB 11.31 billion, short-term debt was RMB 26.79 billion, and net cash flow from operating activities was -RMB 4.2 billion; there is a gap between short-term debt, finance expenses, and money funds, as well as net cash flow from operating activities.

• The cash ratio is less than 0.25. During the reporting period, the cash ratio was 0.13, which is below 0.25.

• The cash ratio continues to decline. In the last three annual reports, the cash ratio was 0.18, 0.15, and 0.13, respectively, showing continuous decline.

From the perspective of cash management, it is necessary to focus on:

• The ratio of interest income / money funds is below 1.5%. During the reporting period, money funds were RMB 5.45 billion, short-term debt was RMB 26.79 billion, and the average ratio of interest income / money funds was 0.292%, which is below 1.5%.

• Other receivables fluctuate significantly. During the reporting period, other receivables were RMB 0.18 billion, with a change rate of 67.28% from the beginning of the period.

From the perspective of funding coordination, it is necessary to focus on:

• Capital expenditures continue to be higher than net operating cash inflows. In the last three annual reports, cash paid for the purchase/construction of fixed assets, intangible assets, and other long-term assets was RMB 3.34 billion, RMB 2.92 billion, and RMB 3.77 billion, respectively. The company’s net cash flow from operating activities was -RMB 6.74 billion, -RMB 14.31 billion, and -RMB 4.2 billion, respectively.

• Funding is coordinated, but payment difficulties exist. During the reporting period, working capital was RMB 12.2 billion; the company’s working capital needs were RMB 44.83B. The working capital brought by investing and financing activities cannot fully cover the company’s needs for operating activities. The company’s ability to make cash payments was -RMB 32.64 billion.

IV. Operational Efficiency

During the reporting period, the company’s accounts receivable turnover ratio was 1.16, down 31.61% year over year; inventory turnover ratio was 1.32, down 6.1% year over year; and total asset turnover ratio was 0.39, down 12.66% year over year.

From the perspective of operating assets, it is necessary to focus on:

• The share of accounts receivable / total assets continues to increase. In the last three annual reports, the ratio of accounts receivable / total assets was 20.98%, 30.82%, and 36.12%, respectively, showing continuous growth.

From the perspective of the three expense categories, it is necessary to focus on:

• Finance expenses fluctuate significantly. During the reporting period, finance expenses were RMB 0.63 billion, up 37.35% year over year.

Click AECC Aero-Engine’s hawk-eye early warning to view the latest warning details and a visual preview of the earnings report.

Introduction to Sina Finance listed company earnings hawk-eye early warning: The listed company earnings hawk-eye early warning is an intelligent, professional analytical system for listed company earnings reports. Through gathering a large number of authoritative financial experts, including accounting firms and listed companies, the hawk-eye early warning tracks and interprets the latest earnings reports of listed companies across multiple dimensions such as company performance growth, earnings quality, funding pressure and safety, and operational efficiency, and provides alerts to potentially existing financial risk points in the form of charts and text. It offers technical solutions for professional, efficient, and convenient identification and early warning of financial risks in listed companies for financial institutions, listed companies, regulatory authorities, and others.

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